Premier Inn Owner Whitbread Creates New Budget Brand

UK hospitality company Whitbread has added a new budget brand to its hotel portfolio: Zip by Premier Inn.

The first 138-room property will open in Cardiff, early next year with a second planned for Southampton, the company said Monday.

The concept involves creating smaller rooms—less than half the size of the standard Premier Inn offering—and selling them at prices starting from $25 (£19.)

The move brings Whitbread’s hotel brands to three, the other two being Premier Inn and Hub by Premier Inn.

Zip properties will located on the outskirts of major towns and cities a differentiator to Hub hotels, which are in city centers.

“Our strategy is to grow and innovate our core UK business and ZIP is a great example of how we are doing that. We have invested in the Premier Inn brand over many years to become the UK’s most-loved hotel company with 800 hotels in the UK, and we believe there is a niche in an under-served market for ZIP," said Alison Brittain, CEO, Whitbread PLC.

"It offers us an exciting new platform for growth and will give us access to a broader customer base, attracting those guests who are on a particularly tight budget but still expect and deserve the basics done brilliantly."

Richard Clarke, an analyst at Bernstein, floated the idea that Zip might be the starting point for pushing the Premier Inn brand upmarket.

"We understand that pricing is one of the areas that many investors see upside to Premier Inn's performance, and we wonder whether the introduction of a budget brands sitting below the core Premier Inn offer is a route to increase rates at Premier Inn by improving hotel technology and rate management, to increase RevPAR while keeping a value proposition for the most cost-conscious Premier Inn customers," he said in a note to investors.

Whitbread is in the process of selling its Costa Coffee chain to Coca-Cola for $5.1 billion (£3.9 billion).